For about a decade, Wal-Mart has been trying to get into the banking industry, even attempting at one point to obtain a banking charter. It abandoned the idea, however, after pushback from regulators and politicians. To circumvent these regulators, the giant chain-store has recently partnered up with Green Dot, a prepaid debit card provider, and is launching a new checking account service.
Because big, traditional banks can’t make a profit off low-income customers, few offer accounts which are accessible to America’s 10 million citizens without a bank account. The un- or underbanked often struggle to provide the minimum amount required to open an account; sometimes there aren’t any banks in rural, lower-populated parts of the country, while Wal-Marts are continuously popping up.
Regardless of the ubiquitousness of its stores, allowing Wal-Mart to keep its stronghold on America’s poor is an awful idea.
Wal-mart depends on those already using assistance programs like food stamps (SNAP) or WIC for its profits. According to Bloomberg, almost half of all food stamp redemptions are in big chain stores like Wal-Mart and Target. “Of the total $72.9 billion in food stamps redeemed, $36.2 billion went to supercenters such as Wal-Mart.” And let’s not forget that a large portion of those on federal assistance are Wal-Mart employees, who are paid so little by the giant corporation that they cost taxpayers over $6 billion a year.
As SNAP benefits are cut and fewer people are eligible for benefits, Wal-Mart, no doubt, sees a drop in profits as there are fewer customers and less money overall to be spent. They see their stranglehold on the poor slipping. These bank accounts assure that low-income customers will have to rely on Wal-Mart as a financial institution, and therefore will be more likely to shop in the store.
While there is a major problem with Americans not having access to bank accounts, there are better ways to get them that access without going through a corrupt corporation. Going through the US Post Office, for example, would help out even more people than Wal-Mart. There are currently 31,000 USPS offices to Wal-Mart’s 4,807 stores.
Not only would postal banking help out those in areas in which there are no banks or Wal-Marts, it would help the USPS remain relevant more of its services are being moved online. Plus, the USPS had its own banking system until 1967, the Nation pointed out.
America’s un- and underbanked need help getting out from the endless cycle of predatory lenders and check cashers. Turning their finances over to Wal-Mart, or any for-profit institution that sees them strictly as an entity off which to make money, isn’t that help. It will only make them more dependent upon Wal-Mart, which is exactly what the corporation has wanted all along.